It’s a commonly asked question – is it cheaper to build a new house or to buy a pre-existing house? And you’d think there would be an easy answer to that simple question, but there isn’t. The answer you seek will arise from many different factors that you need to consider if you’re planning to build or buy a house.
How much does it cost to build a house?
On average, according to Home Advisor, in 2020 it will cost roughly $300k to build a house, or between $165k and $475k. And factoring in a cost of $100 to $200 per square foot, that means a 3,000 square foot home can cost from $300k to $600k to build. Custom homes can cost even more with $200 to $500 per square foot costs being an average range.
Average cost per square foot
The location you build in and the finishes you choose can also substantially change the cost of building a house from scratch, but let’s assume an average cost per square foot of $150. Of course, expensive builds in high-priced city areas with a higher cost of living, like in urban areas of California or New York, can easily run you $400 per square foot or more. This table shows a few examples of square footage matched with average total cost.
Residential construction costs by state
Of course, costs in each state can vary significantly, depending on where the house is constructed, be it in Scottsdale, Prescott, Tucson, or Flagstaff. This table shows average total costs per state where Trelora has offices.
Average cost to build a 1-4 bedroom house
Single-family home sizes have nearly doubled since the 1970s from around roughly 1,500 square feet to about 2,600 square feet today. This table considers location and average single-family home size today in determining the average nationwide cost.
Main costs that go into building a house
Building a house requires a lot to put it on of course. But costs will vary significantly for this part, considering how much land you want and where you want it. So that could mean $3-100k plus.
Once you’ve got your land, you’ve got to make it ready for your house.
- Clearing and preparation – If not including razing or hauling away parts of an existing structure, this can cost between $1-4k.
- Utility hook-up – If it isn’t already hooked up to city services, then you’ll be paying a pretty penny more, but these costs can average between $3-30k.
- Water and sewage – If you’re not hooked up to city water and sewage, you’ll need a well and a septic system. Costs for both can range from $5-21k.
If you have some ideas about designing certain aspects of your new house but aren’t quite sure how to pull it all together as a plan, it might make sense to hire an architect to help you create a blueprint. Or if you’re pretty clear on your vision, you may be able to work with a drafter instead which will be less expensive.
If you’re going through all this trouble to custom design your own new build, then working with someone from the beginning with a lot of experience can be a worthwhile investment. This can also help you figure out what you’re going to want, so you don’t need to make any expensive changes mid-stream. Costs can run from $2k for a drafter to $5k or more for a good architect.
House foundations are generally 3 basic types: concrete slab, crawl space and basement foundations. Slab is almost always the cheapest option, followed by crawl space, and then basement.
- Slabs are basically what they sound like: slabs of concrete with your house on top of it.
- Crawl spaces raise the house a few feet off the ground leaving room to be able to crawl underneath.
- Basements add room to your house, and that alone makes them more expensive to build.
Building a foundation will typically cost you around $8k, with prices varying depending on what you want to do. A simple concrete slab can be $5k, and a fully-finished basement can cost you at least $100k.
After building the foundation, your framing crew will come in and start constructing the skeleton of your house. For a single story, single-family home, costs can range from $20-50k.
Now your construction team is going to make your tinker toy house look more like an actual house. This means adding siding, a roof, windows and doors, and costs for this can run from $40-60k.
At this stage, your construction team will be working to get your house set up with HVAC (heating, ventilation, and air conditioning), electrical and plumbing.
- HVAC – Depending on what kind of sophisticated system you’re installing, this will cost you anywhere from $4-12k.
- Electrical – An electrician will wire your entire house so that you’re powered up. This will hit your cost line for around $10k.
- Plumbing – The pipes, the pipes are calling, and plumbing installation can range from $7-15k.
Just when you thought you were finished with all of this stuff, now interior finish time is happening. These construction guys cover up all the stuff happening within the walls (HVAC, electrical, plumbing for instance) and make it all look great. Additionally, insulation and drywall are important here, along with more exciting cabinetry, flooring, and paint. You’re talking around $70-80k for this part, depending on the quality of the materials.
Of course there are many, many other things you could spend your money on with your new house. Here are a few of the more common ones.
A simple asphalt driveway will be about $800 – If you want that driveway to lead to an attached garage, or you want something longer, wider, etc, then you might ring the bell at $8k or more just for starters.
Basic sod installation will cost you around $1k, and the costs go up from there, depending on your property and your vision for how it should look. A deck or a porch can add an additional $15-20k to the deal.
Pros and cons of building a house vs buying a house
There are many pros and cons behind whether you choose to build your own house or buy a pre-existing one. Here are a few of the easy ones to get your head around.
Get what you want
One pro to building your own home is that you’re much more likely to get exactly what you want, customize it as you like it, from land to design to construction. This can be enough for many to choose to build over buying something pre-existing.
Better for the environment
A new house may also be better for you. Older homes may sometimes contain asbestos, lead paint, or mold. And a new house can be built with specific materials making it better for the environment. Also, you have the option to install or plan for future technology upgrades too, such as home automation and solar.
Recoup your investment
Although the upfront costs for new builds can be higher than for a pre-existing home, it may be easier to recoup your investment with energy efficiency. Homes built after 2000 use on average 21% less energy for heating than older homes, because of increased efficiency of building materials. This translates into reduced energy expense every month.
This is one of the main reasons to build your own house, because HVAC, electrical and plumbing are new and under warranty, typically for 10 years. Your interior and exterior maintenance for a decade is therefore potentially zero dollars. That can seriously make up for some home construction costs.
Everything else aside, building a house can lead to a level of satisfaction that you can’t achieve through buying an existing home. It’s something that you helped bring into being, that you created, and it’s tough to beat that feeling.
Higher costs to build
One of the biggest drawbacks to building a house tends to be the higher costs involved all the way across the board, which can also increase throughout the home-building process as plans may change, materials don’t work like you’d hoped, or there are unexpected labor issues. If the purchase price of a pre-existing home is around $300k, then it will typically cost up to $150k more to build a new house than to buy something that’s already out there.
Time to build
It will also take you much longer to start with land, design what you want, and throw in construction and potential unexpected delays. This process is much slower than buying a pre-existing house, where often you can move in right after closing.
Pre-existing houses are known quantities in the neighborhood or area you are looking. You can find comps on similar sales, see what the history of the house on that land has done regarding appreciation, and you generally can more easily get a good feel for how that house will perform on the market in the future. New house construction, especially in up-and-coming neighborhoods where things are changing fast regarding real estate values and comps, can be much more of a gamble, especially if there are unproven amenities that you are adding to your custom build.
A great thing about pre-existing homes is that typically the landscaping is already there, and the trees are already mature. Consider for example that the U.S. Forest Service estimates mature trees in the right places can save you up to 56% on annual air-conditioning costs.
None of the headaches that come with needing to find your own land, arrange for custom construction, design, and so on come up for buying a pre-existing house. And yes, while of course buying a pre-existing house can present its own issues, it can take up to 6 months (and sometimes longer) to construct a new house – not including finding the land, designing what you want, etc.
Clearly there are advantages to buying a pre-existing house and also to building your own house. The decision is up to you of course, whether overall costs outweigh customization or whether new technologies outweigh having mature trees and solid comps.
But regardless of the choice you make, be sure to work with recommended professionals that can guide you along the way, whether it’s a solid real estate professional for a pre-existing house like the top-agents at Trelora that provide exemplary service and split their buyer’s agent commission with you 50/50 for a house that you buy, or whether it’s working with a qualified general contractor and architect/drafter to build and design your new house effectively.